How much would the middle class benefit under Romney's tax plan?

DES MOINES, IA -- On the campaign trail and on the debate stage, GOP presidential hopeful Mitt Romney makes one point abundantly clear: The middle class has been hit hard in this economy, and he wants to help if he becomes president.

Romney often cites his tax plan as a way he intends to aid the middle class specifically.

"If I'm going to use precious dollars to reduce taxes, I want to focus on where the people are hurting the most, and that's the middle class," Romney explained at a debate on Oct. 11. "I'm not worried about rich people. They are doing just fine. The very poor have a safety net; they're taken care of. But the people in the middle, the hard-working Americans, are the people who need a break. And that is why I focused my tax cut right there."

But liberal-leaning economists argue that the people who get the biggest break under Romney's plan aren't the middle class -- but rather the wealthy.

"Most of the benefits of his tax plan clearly go to upper income people, there's no doubt about that," said Dean Baker, an economist and the co-director of the Center for Economic and Policy Research.

And this week during a speech in Kansas, President Obama took direct aim at tax plans like Romney's, which use as their starting point the preservation of the so-called Bush tax cuts, which disproportionately reduces taxes for the wealthy.

"Remember in those years, in 2001 and 2003, Congress passed two of the most expensive tax cuts for the wealthy in history. And what did it get us?" Obama asked rhetorically. "The slowest job growth in half a century. Massive deficits that have made it much harder to pay for the investments that built this country and provided the basic security that helped millions of Americans reach and stay in the middle class -- things like education and infrastructure, science and technology, Medicare and Social Security."

But in an interview with NBC News, Romney's policy director, Lanhee Chen, was quick to defend Romney's tax plan against criticisms that it benefits the wealthy more than the middle class. Chen argued that holding marginal rates low across the board is vital to spurring more growth.

"We are offering a tax plan that delivers clear tax savings to the middle class, and the idea of holding down marginal rates for everybody is important for economic growth, and economic growth is ultimately what will help propel this economy and create jobs."

A lack of specificsWhile Romney's other policy plans -- for issues like job creation, dealing with China, and rebuilding America's military might -- offer plenty of specifics and fairly detailed timelines for action, Romney's tax reform plan is uncharacteristically vague.

The tax policy for individuals and families, as laid out in the Romney's "Believe in America" jobs and economic growth plan, has four major tenets: 1) maintain marginal rates at current levels (largely by making the Bush tax cuts permanent); 2) reduce or eliminate taxes on savings and investment; 3) eliminate the estate tax permanently, and 4) pursue a "flatter, fairer, simpler" tax structure in the future.

Howard Gleckman, a resident fellow at the non-partisan Urban-Brookings Tax Policy Center, has studied Romney's tax plan as it has been laid out. He says without more specificity, it's impossible to properly compare Romney's vision for tax reform to that of his GOP rivals.

"[The Romney plan is] unlike the Perry plan and the Cain plan, where we were able to actually run the numbers.' Gleckman told NBC in an interview. "Those plans were pretty specific, and we were able to get pretty specific in our analysis of them. You can't do that with the Romney plan. He just isn't specific enough. So you can really only talk in generalities. You can't really talk in specifics. There's no way to say 'Perry would cut taxes by X and Romney would cut taxes by Y.' We just don't know that."

Gleckman took the most exception to Romney's pledge to implement a flatter tax structure in the future.

"It is the easiest thing in the world for politicians to say: I want simpler, flatter, fairer, but that means nothing," Gleckman said. "He has come up with basically platitudes. He's said I want to have tax reform some day, but I won't tell you what my tax reform is going to look like."

No tax on savingsWhere Romney has offered specifics about changing how middle income Americans pay their taxes, it is in his plan to eliminate all taxes on capital gains, dividends, and interest for Americans making less than $200,000 per year.

In response to a question from NBC News in South Carolina in October, Romney explained this plank of his tax platform:

"A first step I want to make sure that middle-income Americans can save their money tax free, and my guess is you're going to find that middle-income families find that they can save their money tax fee with no tax on interest, dividends, and capital gains, they'll be inclined to do more savings," he said. "The benefit that accrues to the nation, that they're providing more capital to the markets and by them being able to save themselves those benefits will accrue dividends and help create additional jobs," Romney said.

"We currently have a system of taxation that doesn't strongly encourage savings and investment in the middle class. So, really, the goal of this tax reform is not just to keep marginal tax rates low, so people can take home more of what they earn, but also to insure that there are proper incentives in place to build the next generation of savers and investors," Chen said. "Anybody who's got any money in the bank at all is going to benefit from this."

The Tax Policy Center estimates that a change in the law eliminating taxation on capital gains and dividends would indeed keep more money in the pockets of middle-income Americans. But not much more. A taxpayer making the median income in the United States -- just more than $50,000 per year -- would see roughly $278 in tax savings. Meanwhile, those making between $100,000 and $200,000 would see a more robust $843 dollars in savings, on average.

Some retired Americans, or people living largely off of savings or investment dividends, might see more of a boost, given the structure of their income.

But Gleckman is dubious that Romney's approach would have the desired effect of creating a culture of more savings.

"Is this going to be sufficient to encourage people to invest? Probably not. Right now, you know, middle-income people, mostly what they're worried about is keeping their job and paying their mortgage," Gleckman said. "In that environment, telling them they're going to get a bigger tax break when they buy a stock and then sell the stock... I don't think they really care very much."

The Center for Economic and Policy Research's Baker agrees.

"It doesn't look to me like it really has much impact. The one thing that would have a very, very limited impact for middle-class people is he'd get rid of the capital gains for people making under $200,000. But those people pay almost no capital gains," Baker said. "Most middle-class people, if they have capital gains, it's in their retirement account, and that is taxed as ordinary income."

On that point, Chen sees Romney's plan as a possible new model for retirement savings.

"I kind of see this as another way to help folks save for retirement, that doesn't have all the strings attached that the current IRA and 401k system does," he said. "It could be an option for folks who want to save to buy a home, for major purchases in their lives, or for folks who just want to be able to save tax free for, for whatever future events they may have in their lives."

Payroll tax extensionThe relatively modest dollar amounts listed above are each less than the projected savings that a middle-class family would get from extending the payroll tax cut -- a measure currently hotly contested on Capitol Hill. Romney was roundly criticized by Democrats for originally calling the cut a "temporary little Band-Aid." But just this week, he changed his rhetoric and said definitively he would support an extension of the tax cut.

"I would like to see the payroll tax cut extended, because I know that working families are really feeling the pinch right now -- middle-class Americans are having a hard time," Romney said on conservative Michael Medved's radio show.

Romney's campaign also pushed back against the notion that the candidate was ever actually against the payroll tax cut extension. A campaign spokesperson explained that the ex-governor's belief was that a temporary extension of the cut was a good idea, but not, on its own, a strong enough reform.

"Gov. Romney has never met a tax cut he didn't like," campaign spokeswoman Andrea Saul said in a statement. "He has made it clear that he does not believe that by itself the payroll tax cut will create the type of permanent long term change that is needed to turn the economy around,"

Looking at the field But if tax plans are purely comparative, Romney can find solace in a simulation run by Bloomberg BusinessWeek in conjunction with the Tax Institute, which found Romney's plan benefited a hypothetical middle-class families more than did the plans for Perry, Cain, Jon Huntsman, or President Obama.

The two economists say they expect Romney to be pressed for more specifics as the primaries move forward, and as his personal income tax plan is compared to those of his rivals, including the surging Newt Gingrich.

"What he's talked about, what he's been specific about, is not tax reform," said Gleckman "It's basically tinkering around the edges of the tax law that Barack Obama extended last year." Romney has cited the controversial Bowles-Simpson deficit-reduction commission as a "good starting point" for a more robust conversation about tax reform. But will he be pushed to start that conversation this primary season? Or could it be held for a time when Romney might get the chance to take on President Obama directly?

"At that point he may well come up with something that's more detailed. I'd be surprised in fact if he doesn't," said Baker. "I think he's got a decent chance of winning, but there's no doubt about it -- you don't unseat an incumbent president easily. This might be a starting point, but I'm sure he'll have more things to add to it."

A senior Romney adviser says a more robust tax reform policy is "actively" under development at campaign headquarters in Boston even now. But when it might be revealed? The adviser wouldn't say.